Pension reform and wealth inequality: evidence from Denmark

Torben M Andersen, Joydeep Bhattacharya, Anna Grodecka-Messi and Katja Mann

No 17078, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: A growing literature explores reasons for rising wealth inequality, but disregards the role of pension systems despite their well-understood influence on life-cycle saving. In theory and according to available evidence, both pay-as-you-go (PAYG) and fully-funded (FF) pension schemes crowd out voluntary retirement saving. They differ because aggregate savings decrease in the former but increase under the latter system. Unlike most nations, Denmark has seen a decline in wealth inequality in recent decades. This paper studies a calibrated life-cycle model of Denmark and employs unique registry data to argue that a Danish pension system transition, from a mostly PAYG to a dominant, mandated FF scheme, explains much of this decline

Keywords: Wealth inequality; Pension systems; Crowding out; Life-cycle savings (search for similar items in EconPapers)
JEL-codes: D31 E01 E21 G51 H55 J32 (search for similar items in EconPapers)
Date: 2022-03
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP17078 (application/pdf)

Related works:
Working Paper: Pension reform and wealth inequality: evidence from Denmark (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:17078

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP17078

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().